After its first full quarter of ownership, the Rockwell Collins acquisition already is reaping greater-than-anticipated benefits at United Technologies Corp. (UTC) as its newly formed Collins Aerospace unit posted a net profit of $856 million on $6.5 billion in sales, UTC executives reported today. UTC completed its $30 billion acquisition of Rockwell Collins in late November, combining the avionics and interiors giant with its own UTC Aerospace Systems (UTAS) to form Collins Aerospace.
Noting the acquisition brought 20 cents of accretion to share value in the first quarter and was marked by “really solid performance” across all of the legacy businesses, UTC chairman and CEO Greg Hayes said, “This exceeded even our expectations. As we worked as a combined team for a full quarter, I am even more confident in the long-term value the acquisition is going to bring to shareowners and our employees.”
On an adjusted basis, reflecting one-time costs and savings involved with the acquisition, Collins Aerospace profit reached $1.1 billion with a 16.9 percent margin. Sales for both commercial and aftermarket activity within Collins Aerospace were up in the “low double digits.” The company said that the integration activities remain on track to produce $150 million in synergies this year.
That performance, combined with gains across UTC’s four main business lines, including Pratt & Whitney, led to an overall 20 percent boost in sales for UTC (8 percent organically). As a result, UTC slightly boosted its earnings-per-share outlook for the year from $7.70 to $8 to $7.80 to $8. The company, however, did not revise its sales expectations for the year or its organic growth.
Company executives also acknowledged some ramifications to its aerospace business from the Boeing 737 Max grounding, saying it could have up to a 10-cent-per-share effect this year.